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From the conversation of the President of Azerbaijan Republic Heydar Aliyev while receiving the delegation headed by Steven Sestanovich, special assistant of the US State Secretary on the CIS - Presidential palace, October 21, 1999.

Heydar Aliyev: Dear guests, you are welcome to Azerbaijan. I greet you all and I`am pleased to meet you again.

Our meetings always make it possible to discuss the relations between Azerbaijan and the United States, and in particular, that avails to discuss our one big problem - the Upper (Nagorno) - Garabagh conflict between Armenia and Azerbaijan. I consider the relations existing between the United States and Azerbaijan are developing successfully, especially in the sphere of politics and economy.

It is true that some problems are still to be solved. However, I think that the development of relations seems to be all right here. But as to Azerbaijan - Armenian conflict over the Upper (Nagorno) - Garabagh, we have done insufficient work, if to take into regard that the United States of America is one of co-chairmen of the Minsk group and 1999 is to be over. At the beginning of September, mr. Cavanaugh visited Azerbaijan.

I have told him when we met and I reiterate that the activity of the Minsk group is very poor. We are displeased both of the work of the Minsk group and as well as the work of the United States of America, being one of the co-chairs of the Minsk group. Because much work could have been done within a year. But I have a feeling that the attitude to this issue has activated in the US lately. I especially noticed it from the message of Ms. Albright and from the letter sent to me by the vice- president Mr. Gore, that the USA doubled its activity to settle this problem. I am pleased of this attitude and I hope, if this activity does not fade further, we can find ourselves ahead.

You well know that by the mediation of mrs. Albright there was arranged a tête-à-tête meeting of the presidents of Armenia and Azerbaijan in April in Washington. We have continued these meetings later on as well. There were meetings between our foreign ministers and particularly, when we were in Yalta, the ministers of foreign affairs of Armenia and Azerbaijan met there and we had a feeling that there was apparently a progress to achieve. Afterwards again at the initiative and mediation by mrs. Albright, the foreign ministers of Armenia and Azerbaijan met anew in New York.

I positively estimate all these and emphasize once again, that all testify to a growing of interest to the solution of this problem in the USA and certain practical measures are being taken. I'd wish this activity to progress more intensively, and it is mainly because there will be held the OSCE summit meeting on the 18-19 of the next month in Istanbul. Naturally, we have to attend this summit meeting with some concrete results.

I know there is a very great interest to a tête-à-tête meetings of the presidents of Armenia and Azerbaijan both in the United States of America and in some other countries too. And in general, as far as I know, the world public positively estimate these tête-à-tête and indirect meetings. In Azerbaijan the greater part of the society also estimate it positively. Because they are in the hope that as a result of these meetings, it is possible to come close to the settlement of the issue and/or possible to solve it.

After this meeting, both I and president Kocharyan have also declared that to settle the problem compromises were to be made. That's the truth. If no compromises, it would be impossible to solve the problem.

But in Azerbaijan the opposition forces in particular are in very negative terms with it. They consider that neither concessions, nor any compromises may be made. However it is up to them to decide. On my part I think that should these meetings yield some positive results, naturally, all these would be accepted by the society of Azerbaijan with satisfaction.

Thus we are in such a stage, that we can make any kind of progress. And therefore, it is necessary to discuss and consult over it, certainly, what to do and not to do. You may dwell on these issues your ideas. Please.

Steven Sestanovitch: Thank you very much, Mr. President. I`am glad to meet you again. First of all, I would like to extend to you the greetings of president Clinton and the state secretary Albright.

Mr. President, you have told here about a good level of relations between America and Azerbaijan and we agree with your thoughts. Beginning from your Washington visit in 1997, these relations have progressed, expanded and reached a high level. These relations lay down on sound basis of common interests. But common interests embrace numerous of spheres. It may deal with oil production or diplomacy as well.

As you know, the United States by every means supports the efforts of the countries in this region to establish their modern political, social and economical institutions, as well as to strengthen their independence. The present time is very significant for our relations. As is generally known, in a month there will be held a summit meeting of the OSCE in Istanbul. We work together and hope that the progress attained in our relations will be reflected at the summit meeting.

Now, if to take the energy sector, we are also greatly interested, as you are, in the work on the construction of the Baku - Ceyhan oil-pipeline to be conducted on well grounds. To the best of my knowledge, this week while meeting with Demirel, you have said that it was a very great achievement in the region.

We also hope that the work on the issue of ordinary weapons in Europe will be accomplished and an agreement will be signed in Istanbul. It is in accord to the interests of the US and Azerbaijan.

Certainly, we also work on the diplomatic issue concerning the Upper (Nagorno) - Garabagh conflict. As a co-chairman of the Minsk group, we would like very much the international community to find a speedy solution of this conflict and show its activity. We are, certainly glad that the increase in the Minsk group's activity satisfies you. I remember, in April during your meeting with Albright, you charged the Minsk group and the US to substantiate their activities. Along with the satisfaction of increase in the activity of the Minsk group, we also express our pleasure for your direct dialogue with the leadership of Armenia.

We have heard you using the word "improvement" in connection with the present situation and with the Istanbul summit meeting. We are anxious to hear your viewpoints on common results attained in the relations between Armenia and Azerbaijan. Because it is, certainly, a serious test in itself whether an agreement would be possible or impossible. It is doubtless that an international community and the Minsk group can help to achieve the agreement, however, both parties bear responsibility for the achievement of this agreement.

As you have said earlier, the results of an agreement would be a kind of test provided that how far it suited the particular interests of these countries.

Saving your presence, I would say in conclusion that notwithstanding for better relations between the USA and Azerbaijan for the last two years, there's still a great potential to develop it further. The projects we are working on at present and will go on working next month, will create much more basis for a large -scale cooperation. I want to thank you again for receiving us and making this opportunity for analyzing the results of our cooperation in numerous spheres.

Heydar Aliyev: Thank you. You've mentioned the Baku- Ceyhan issue. I want to make it known that we have worked on this problem very hard for the last months. Our delegation group works jointly both with government of Turkey, with companies entering the consortium and as well as with companies of the US. You say that there were created many problems here. The problems here were because, the companies entering the consortium were not predisposed of the construction of the Baku - Ceyhan pipeline in those years, that1s, they were not much fond of it.

About a year ago, on October 29, we signed a declaration on this pipeline in Ankara. That declaration was also signed by Mr. Richardson, the minister of energy of the USA. We have done intensive work in a year bygone. It means that the position of Azerbaijan in this matter is unchangeable, and as to certain obstacles motioned by the consortium and AIOC, as though the cost of pipeline is too much etc, we tried to prove that their views were incorrect.

During the last 25 days, our large delegation staff carried out intensive work with the government of Turkey in Ankara. As a result, an opinion was advanced that the pipeline passing through the territory of Turkey, would be constructed by the company of Turkey and they would undertake any risk occurred there. Because consortium did not believe the information given by Turkey that the Baku - Ceyhan oil pipeline would come to 2, 4 billion dollars. Thereby, they laid down condition that if the amount exceeded by the end of construction, Turkey would undertake a surplus portion. Turkey agreed with it at the outset, but later it advanced a suggestion that if the cost of a pipeline passing through the territories of Azerbaijan and Georgia should be undertaken by the consortium, i.e. by the companies. It meant that Azerbaijan would also undertake a similar risk, since Georgia shared nothing in the consortium. The income of the consortium is constituted by their own profit and the profit also that of Azerbaijan. Out of about 2.400 billion dollars, 1.400 billion dollars were Turkey's share, whereas, 1 billion dollars were shared by Azerbaijan and Georgia. The companies were against it.

I think that the position of the USA and personally of Bill Clinton on this issue helped the companies to more seriously appreciate and approach to the problem.

On the 18th of this month, we have had a thorough discussion of this issue, when president of Turkey Mr. S. Demirel was here. Finally, we promised S. Demirel and also declared that we, the Azerbaijan party, would undertake to discuss this problem with the consortium companies and make them take those risks themselves. We have conducted these talks. To day Mr. John Brown, head of the BP- Amoko has sent me a letter saying that they agreed with this proposition. So, we have solved this complicated problem. It is natural that the final agreement and contract on this issue may be concluded in Istanbul.

You have also spoken about the expansion of economical relations between the USA and Azerbaijan. It is obvious that there are sufficient reserves here and it is very necessary to employ them. Lately, I received the president of "Motorola" company here and you know well that it is a big company in America. They have some problems with our Ministry of Communication. I promised to solve their problems and take all the measures to creating most favorable conditions for expansion their activities.

In fact, no matter how complex are the problems here, it is possible to overcome them. But in the Armenian-Azerbaijan conflict there is the Minsk group and its co - chairmen, big states, like the USA, Russia and France. And each time you tell us that you help us, however we have to come to agreement ourself. You know that it is also difficult to come to agreement. Because 20% of Azerbaijan territory is occupied and more than one million people live in tent - camps.

It was raining all day long two days from now. We felt a bit of cold in these rooms. But I was all the time thinking of those people living under the tents. Try as much measures as we can, it is hard to live under the tents, both in winter time and as well as in summer time. This is why, it is very important to discuss these problems seriously and I want to do it together with you.